Mark Carney has given himself one month to decide on what to do about the hottest topic in the British economy: the housing boom.
Batting away questions on a possible property bubble this week, the Bank of England governor pushed the onus for cooling the market on to his financial-stability officials. The Financial Policy Committee now has four weeks to prepare for a June 17 decision when it can either unleash untested tools to curb lending or come up with a good excuse as to why it did not.
With the economic recovery broadening and inflation under control, housing has become Carney's biggest domestic concern - and threat to his reputation - as he heads towards his first anniversary in charge of the bank. Tackling a property boom revved up by record-low borrowing costs and government incentives, the governor will need to keep the Treasury and rate-setting policymakers in the loop.
"It would be surprising if we didn't get something in June," said Mike Amey, a money manager at Pacific Investment Management. "The clearest component of economic strength in the UK at the moment is the housing market."
Carney said on Wednesday that interest rates were the "last line of defence" against housing risks and that the FPC would "look hard" at vulnerabilities.
Financial-stability officials have already ended incentives for mortgages and announced a set of bank stress tests. The panel, which will publish its recommendations on June 26, said it is ready to take more action if needed.
"What we don't have at the FPC, and never will have, is an ability to control all aspects of the housing market," Carney said. "We can't perform miracles. What the FPC can do is to reduce risks that emanate."
Chris Scicluna, head of economic research at Daiwa Capital Markets, said: "This is the first meeting that anyone's really going to be paying attention to, so one would hope that the communication will be very clear and lay down a marker and establish credibility."
Affordability tests came into force in Britain last month, requiring borrowers to prove they can afford repayments even when interest rates rise in line with market expectations. After its March meeting, the FPC said a tool to make those tests more stringent will be available as soon as June.
House prices jumped almost 11 per cent in April, the biggest annual gain since 2007, according to Nationwide Building Society.